What constitutes a 'Super-Majority' of Fat Shack franchisees for the purpose of modifying the Franchise Agreement?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
r it has been signed.
- b. This Agreement may be modified by FSI at its option whenever FSI and a Super-Majority, as hereinafter defined, of franchisees of FSI agree to the modification. A "Super-Majority" of FSI franchisees shall consist of the owners of at least 75 percent of all FAT SHACK Restaurants, or, if only a portion of FAT SHACK Restaurants are affected by the modification, at least 75 percent of those FAT SHACK Restaurants affected by the modification. Whenever a modification is approved by a Super-Majority, FSI may elect to treat the modification as effective to all franchisees or the applicable group thereof, including Franchisee, to the same extent and in the same manner as if the modification was unanimously approved by all applicable Franchisees, and regardless of whether Franchisee may or may not desire to be
bound by the modification. FSI shall provide Franchisee with notice of any modification to this Agreement based on a Super-Majority approval at least 60 days prior to the date such modification is to be effective. By signing this Agreement, Franchisee appoints the officers of FSI as its attorneys in fact with irrevocable power and authority to execute any such modification so approved.
- c.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack Franchise Disclosure Document, a 'Super-Majority' of franchisees is required for Fat Shack to modify the Franchise Agreement at its option. A 'Super-Majority' is defined as at least 75% of all Fat Shack restaurants. If the modification only affects a portion of Fat Shack restaurants, then a 'Super-Majority' consists of at least 75% of those Fat Shack restaurants affected by the modification.
If a 'Super-Majority' approves a modification, Fat Shack can elect to apply the modification to all franchisees or the specific group affected, regardless of whether an individual franchisee desires to be bound by it. Fat Shack must provide franchisees with notice of any modification based on 'Super-Majority' approval at least 60 days before the modification takes effect.
By signing the Franchise Agreement, a franchisee appoints the officers of Fat Shack as their attorneys-in-fact with the authority to execute any modification approved by a 'Super-Majority'. This means that individual franchisees are bound by the decisions of the 'Super-Majority' and have granted power of attorney to Fat Shack's officers to implement those changes on their behalf.
This clause has significant implications for prospective franchisees. It means that a franchisee could be bound by changes to the Franchise Agreement even if they disagree with those changes, as long as 75% of franchisees (or the affected group) agree. The franchisee also gives up some autonomy by granting power of attorney to Fat Shack's officers to execute these changes. Prospective franchisees should carefully consider this aspect of the agreement and understand that they will be subject to the collective decisions of the 'Super-Majority'.